AUD/USD pares gains as strong US jobs data supports the US Dollar.
Holiday-thinned liquidity keeps price action muted despite NFP upside surprise.
Strong US jobs data gives the Fed room to keep interest rates unchanged for longer.
AUD/USD reverses earlier gains on Friday as stronger-than-expected US Nonfarm Payrolls (NFP) data supports the US Dollar (USD), adding modest pressure on the Australian Dollar (AUD), while price action remains subdued amid thin liquidity due to the Good Friday holiday.
At the time of writing, AUD/USD is trading around 0.6900, after touching an intraday high of 0.6916. Meanwhile, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is consolidating gains above the 100 mark.
According to data released by the US Bureau of Labor Statistics, the US economy added 178K jobs in March, comfortably exceeding expectations of 60K. Notably, February’s figure was revised lower to show a loss of 133K jobs, compared to the previously reported decline of 92K. The Unemployment Rate ticked lower to 4.3% from 4.4%.
Despite the strong headline print, softer wage growth offered a more balanced picture. Average Hourly Earnings rose by 0.2% MoM in March, below the 0.3% forecast and easing from 0.4% previously. On an annual basis, earnings increased by 3.5%, missing expectations of 3.7% and slowing from 3.8%.
The data reinforced expectations that the Federal Reserve (Fed) will remain patient before delivering any rate cuts, as ongoing Oil-driven inflation risks continue to cloud the policy outlook. This has prompted traders to scale back rate cut expectations and increasingly price in a prolonged hold, with markets now expecting rates to remain unchanged through 2026, according to the CME FedWatch Tool.
Elsewhere, traders also digested the latest data from the National Bureau of Statistics of China, released earlier on Friday, which showed the Manufacturing Purchasing Managers Index (PMI) rising to 50.4 in March, up from 49 previously and above expectations of 50.1. Australia’s economy is closely tied to China, its largest trading partner, making the Australian Dollar sensitive to shifts in Chinese economic activity.
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